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  • The Internet of Things in Manufacturing Innovation Processes

    1 Caputo, Marzi & Pellegrini Forthcoming in Business Process Management Journal ISSN: 1463-7154

    Forthcoming in Business Process Management Journal

    THE INTERNET OF THINGS IN MANUFACTURING INNOVATION PROCESSES: DEVELOPMENT AND APPLICATION OF A CONCEPTUAL FRAMEWORK

    Andrea Caputo

    Lincoln Business School, University of Lincoln, Lincoln, United Kingdom Giacomo Marzi

    Department of Sciences for Economics and Business, University of Florence, Florence, Italy Massimiliano M. Pellegrini

    Department of Business Administration, University of West London, London, United Kingdom Abstract Purpose: This study aims to contribute and enrich the scientific debate about the phenomenon called the Internet of Things (IoT) from a managerial perspective. Through the lenses of management and innovation literature, we investigate the main facts that characterize the IoT and developed a conceptual framework to interpret its evolution. The framework has then been applied to the case of a three-dimensional (3D) printing technology used for additive manufacturing. Design/methodology/approach: A theoretical analysis of the phenomenon of the IoT and its main elements has been performed to construct a conceptual framework in a managerial fashion able to describe the evolutionary impacts of the phenomenon on the manufacturing industry. Findings: Through consequential steps, namely radical, modular, architectural and incremental innovation, and by adopting and integrating the Henderson and Clark model, we explain the cornerstones of the evolutionary impact of the IoT on the manufacturing industry. Finally, we apply our framework to the case of additive manufacturing and 3D printing. Practical implications: Our framework’s practical value is related to its employability in interpreting and possibly forecasting the evolution of manufacturing industries thanks to the advent of the IoT, allowing managers to capture value arising from technological changes. Originality/value: This study offers a clear and simple model to interpret the impacts of the IoT. Such a goal has been obtained by systematizing the disconnected research on the topic and arranging such contributions into solid paradigms of the managerial literature. Keywords: Internet of Things (IoT), manufacturing industry, innovation, evolutionary model, additive manufacturing, 3D printing

  • The Internet of Things in Manufacturing Innovation Processes

    2 Caputo, Marzi & Pellegrini Forthcoming in Business Process Management Journal ISSN: 1463-7154

    1. Introduction In recent decades, challenges in the competitive arena have grown exponentially. Companies are nowadays experiencing extreme competition, mainly due to increasing pressures from technological changes and global challenges. These “emerging” pressures result in the globalization of manufacturing, characterized by faster transfers of materials, complex payment systems and the compression of products’ life cycles, which drive the need for the superior integration of technologies with increasingly sophisticated customers’ needs (e.g. Shepherd and Ahmed, 2000). Successful companies do not only respond to their current customers’ or organizational needs, rather they anticipate future trends by developing ideas, products or services to rapidly and effectively meet future demands. Such an ability is an essential requirement to develop and sustain a competitive advantage (Porter, 1985; Peteraf, 1993). Thus, through innovation in products and processes, companies increase their capacity to enter or create new markets and this ultimately represents an key for success (Li et al., 2013; Teece, 2010). Among all the sets of pressure of a technological nature, the advent of the Internet has deeply affected companies’ approach to production and has strongly reshaped organizational and operational structures. However, the role of the Internet in manufacturing is still understudied as it is for the “Internet of Things” (IoT) phenomenon, i.e. the advent of sophisticated networks of objects and items connected through the web, often equipped with ubiquitous intelligence (Xia et al., 2012). The pertinent literature on the topic is fragmented and mostly focused on in-depth analyses of specific cases, predominantly with a focus on engineering aspects (e.g. Ashton, 2009; Gubbi et al., 2013; Guinard et al., 2010). Despite acknowledging the fine-grained knowledge retrievable from such cases, such “disconnected” works do not allow for clear possible categorizations and evolutionary roadmaps of the phenomenon of the IoT, especially in terms of managerial implications. Thus, the aim of this paper is to investigate the main facts that characterize the IoT and through this, theorize a conceptual framework coming from the innovation literature in order to analyze and interpret the past, present and future dimensions of the influence of the IoT on manufacturing. Since the IoT is still a developing concept, our model also contributes by clearly positioning and framing the phenomenon into traditional models of the managerial literature. The paper is structured as follows. In the first part, we present a wider view of innovation in manufacturing. By using the definition and evolution of Intelligent Products, we retrace the evolution of the IoT phenomenon in the manufacturing industry, presenting four main facts that have characterized it over recent years. Consequently, we reframe these facts into four evolutionary stages in the light of the most accepted innovation theories in order to build a conceptual framework, while also highlighting the implications for product and process innovations from manufacturing firms. Finally, we apply our conceptual framework to the emerging phenomenon of 3D printing in the larger sector of additive manufacturing to demonstrate the validity of our model. 2. Manufacturing and the challenges of Internet-based technology Innovation in manufacturing is an historical field of study (e.g. Schroeder, Scudder and Elm, 1989). Many empirical studies have linked the survival of firms to the possibility of sustaining a

  • The Internet of Things in Manufacturing Innovation Processes

    3 Caputo, Marzi & Pellegrini Forthcoming in Business Process Management Journal ISSN: 1463-7154

    continuous innovation process (Adner and Levinthal, 2001). In a recent systematic literature review on manufacturing, collecting contributions from the period 1993-2003, Becheikh, Landry and Amara (2006) clearly show how innovation is considered to be one of the main factors affecting companies’ survival. However, it is also true that the actual competitive situation has speeded up the pace of innovation in terms of its discovery, implementation, introduction and diffusion into the market. This has provoked a reinforcing self-fueled loop that has pushed companies to continuously innovate products and services to guarantee a better performance (Lööf and Heshmati, 2006; Prajogo, 2006). This fact is even truer with the advent of the Internet and the third industrial revolution, called the digital revolution (Devaraj, Krajewski and Wei, 2007). Advanced manufacturing technologies strongly rely on various ICT technologies to achieve higher productivity, higher quality and lower production costs. Such an effect is especially focused on processes of manufacturing automation, and of information systems (Anaya, Dulaimi, and Abdallah, 2015; Tian, Yin and Taylor, 2002). Indeed, the advent of Internet-based technologies has led to the emergence of new manufacturing philosophies and new forms of organization, such as virtual organizations, remote manufacturing, computer-integrated manufacturing systems, and Internet-based manufacturing, i.e. wireless milling machines, coordinated measuring machines, networked sensor arrays and surveillance systems (Bi et al., 2008; Dewan, Bing and Seidman, 2000; Pratt, Sriram and Wozny, 1997). For example, “design anywhere, manufacture anywhere” is a new approach to production which shares design and manufacturing data across multiple platforms and infrastructures (Kellmereit and Obodovski, 2013; Manenti, 2011). Recent studies have confirmed such trends, indicating that the future of manufacturing firms will be mostly information-oriented and knowledge-driven, leading to a much more flexible and an abudance of automated operations systems (Davenport and Short, 2003; Li et al., 2010). Any manufacturing technology thus will need to be integrated in a network system and to work in “distributed environments”, i.e. environments populated by interconnected physical items and virtual systems able to perform integrated tasks, regardless of the physical location of specific machineries, devices or processes, dealing with different databases or information acquired externally (DaCosta, 2013; Kehoe and Boughton, 2001). The benefits of Internet-based solutions within manufacturing environments are recognized, especially in terms of scalability with the demand and of flexibility in deploying and customizing solutions (Dewan et al., 2000). Cloud-based design and manufacturing provides a good example of these benefits. It refers to a service-oriented, networked, product development model in which service consumers are able to configure products or services and reconfigure manufacturing systems (Devaraj and Kohli, 2003). In detail, “Cloud-Based Manufacturing (CBM) refers to a networked manufacturing model that exploits on-demand access to a shared collection of diversified and distributed manufacturing resources to form temporary, reconfigurable production lines which enhance eff